Friday, December 6, 2013

How Many Degrees to pay off a Student Loan?

One of the hot topics of the day is
employment for young people. Are people
coming out of university today over-entitled hipsters who are unwilling to take
entry level work and expect to be Director of Basket Weaving right out of
school? Or is it a shift in economics
that is holding them back, forcing them into slave labour where they work
themselves to death.

My personal experience: I fall somewhere in
the gap between Gen X and Gen Y. I
graduated with a degree in Mechanical Engineering and partially completed a
Masters in Mining Engineering (making potential employers bow down at my feet
and sacrifice virgins in my name according to the news these days) and when I
came out of school the recession was flirting heavily with us, but not ready
for hot, sweaty sex just yet. From there I worked
myself into a niche where there are only a few jobs, but even fewer people who
know how to do it well. That is to say I
have been blessed with continuous, gainful employment and I thank God for it.

A major reason I got there was because I
went to university. My parents recommended
demanded it. I think I’m typical of my
generation in this regard. My parents’
generation largely did not go to university (8-12% had a Bachelor’s or higher
in their time. They saw a significant difference in the lifestyle of those who
had vs. those who had not. That is borne
out by the statistics from back in the day.

Side note – most all of this data
is American – it’s a lot easier to find, I’m taking talking trends that are broadly
similar in Canada, and for all the NSA folks reading this GO ‘MURICA!!!

So it made sense for my parents to be
flogging me on that path (and I’m grateful they did). It seems most parents of that generation said
the same thing as the percentage of people with a Bachelor’s Degree has been
steadily climbing.

Given the veritable flood of ivory tower
elitists compared to yesteryear, supply and demand (it’s the law, doncha know),
and all the bitching and whining about no one being able to find a job after
university I was expecting to see the wage gap between high school and a
Bachelor’s degree shrink from 1991 to today.

Overall

High School

Bachelors+

Difference

Year

Male

Female

Male

Female

Male

Female

Male

Female

1991

$23,686

$11,580

$21,546

$10,818

$39,803

$23,627

84%

118%

2001

$32,494

$18,549

$28,343

$15,665

$54,069

$33,842

91%

116%

2012

$38,428

$23,946

$31,064

$18,213

$63,272

$42,027

104%

131%

Median Earnings by Education and Year, or
Stay in School, yo.

Well shit, that didn’t work. Admittedly, I smoothed things out
considerably by looking at only three years out of 20, but generally the wage
premium for a degree has remained fairly steady for the last 20 years. Maybe we need to dig deeper into the
data. Supposedly some degrees are worth
more than others. Much of this has been
ballyhooed about in the news. Get a degree
in

Engineering

Advertising

Pharmacy

Accounting

and you will be rich, famous and sexy when
naked. Get a degree in

Arts

Psychology

Education

Social Science

and the stairway down from your convocation
goes directly into debtor’s prison.

That’s all good to know, if not terribly
surprising. Not many people expect to
get a Physicist’s salary after their degree in Film History. It’s nice to know what the employment and
salary prospects are for various degrees. Less for selection purposes (people choose
degrees in line with their gifts, abilities and interests more than money – not
everyone is meant to be a teacher or an accountant), but more so you can answer
the question of whether it will be you or your children that pay off your
student loan.

Universities are complicit in this. They sell you on the general (People with
degrees make more money and are sexier when naked), but don’t get into the
specifics (those Advertising majors are smokin’ but avert your eyes from the
basket weavers). Their objective is to….well,
that’s a good question worth its own discussion.

Here’s the annoying thing about all
this. Governments, business, lobbyists,
and disgruntled bloggers can spit out all the statistical meanderings we
want. Yes, it can guide policy to an
extent (what are the values of our country, our province, and how does our
post-secondary education system encourage and support that). But it doesn't mean jack to anyone
individually. Looking at this data and
saying “hey, everything is alright,” doesn't help my friend with his teaching
degree find a position in Vancouver when there are none.

Looking at the data and saying “there’s way
too many new teachers, let’s cut the number of education grads in half,” doesn't
help a First Nations school hire a teacher when none are willing to go there. Problems are local and personal. Knowing engineering pays more than film
school doesn't help the kid who made 50 short films in high school that created
a YouTube cult following, but can’t for his life pass remedial Math 9.

I struggled for a long time to find a
conclusion to this post. And to leave it
here just seemed whiny and bitchy. Overall,
a Bachelor’s degree is still a great investment. Some maybe more so than others. Parents, discuss this with your kids. Encourage post-secondary, but don’t just leave
it at that: help them map out where their choices in post-secondary lead them
five, ten years down the road.

And
don’t forget non-degree options as well.
Trades can offer as good or better money and lifestyle (again it’s
specific and local – Heavy Duty Mechanics and Welders are currently hot, carpenters
less so. It will change before your kids
graduate). None of this is to force them
down one road or another, but so they at least know the consequences of the
choices they’re making. Then when you
have to bail out their $100,000 student loan for their degree in Post-Modern Latvian Chamber Pots you can
say I told you so.